Far East Hospitality Trust 3Q18 net property income up nearly 12 percent after acquisition

Singapore two-dollar bills

Far East Hospitality Trust reported third quarter net property income rose 11.8 percent on-year to S$27.69 million on the acquisition of the Oasia Hotel Downtown.

Gross revenue for the quarter ended 30 September rose 11.1 percent on-year to S$30.51 million, the trust’s manager said in a filing to SGX before the market open on Tuesday.

Finance expenses rose 46.1 percent on-year to S$7.18 million in the quarter on an additional loan, which was drawn down to fund the Oasia Hotel Downtown, and on higher short-term interest rates, it said.

The distribution per stapled security (DPS) for the quarter rose 1.9 percent on-year to 1.05 Singapore cents, up from 1.03 Singapore cents in the year-ago quarter, the filing said.

“The improved environment in the hotel sector has enabled our properties to perform better. The portfolio also received a lift from Oasia Hotel Downtown which was acquired earlier this year. We will continue to enhance our properties so as to improve the overall performance,” Gerald Lee, CEO of the REIT manager, said in a statement.

Average occupancy of the hotels was at 90.7 percent in the third quarter, up from 89.4 percent in the year-ago quarter, while revenue per available room (RevPAR) was S$168, up 5.1 percent on-year from S$159 in the year-ago period, it said.

“In addition to the positive impact of adding Oasia Hotel Downtown to the portfolio and the improvement in performance by the recently renovated and rebranded Orchard Rendezvous Hotel (formerly known as Orchard Parade Hotel), there has been an uptick in overall market demand on the broader front,” the statement said.

For the hotel outlook, the REIT manager pointed to Singapore’s visitor arrival growth of 7.5 percent on-year for the first eight months of 2018, while the trust’s compilations indicated new hotel room supply growth has tapered to 1.1 percent this year, it said.

Serviced Residences

For the serviced residences (SRs), average occupancy was 87.2 percent in the third quarter, down from 89.0 percent in the year-ago quarter, while revenue per available unit (RevPAU) was S$186, down 5.4 percent on-year from S$196 in the year-ago quarter, it said.

“While there has been an improvement in the performance of the SRs quarter-on-quarter, the portfolio continued to be challenged by the softness in corporate demand,” it said.

“The outlook for Far East H-Trust’s serviced residences remains subdued as the long-stay market continues to be impacted by room rate pressure from corporate accounts, a tight foreign labor policy and a greater availability of home-sharing options,” it said in its outlook.

For the retail and office space segment, revenue fell 0.8 percent on-year to S$5.5 million, it said.

For the nine-month period, net property income rose 9.1 percent on-year to S$76.43 million, while gross revenue increased 8.5 percent on-year to S$84.76 million, it said. The DPS rose 2.4 percent on-year in the nine-month period to 3.00 Singapore cents, up from 2.93 Singapore cents in the year-ago period, it said.

Far East Hospitality Trust has a portfolio of 13 properties in Singapore with 3,143 hotel rooms and serviced residence units, it said.

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